Wednesday, December 18, 2019 8:57:35 AM
December 18, 2019 by Johnny H
During this week’s Value: After Hours podcast Taylor, Brewster, and Carlisle discuss why some CEO’s insist on taunting traders who short-sell their company’s stock. Here’s an excerpt from the discussion:
Bill Brewster: Yeah. Something that came into the news recently was Lourenco Goncalves at Cliff’s Natural Resources, or Cleveland Cliffs, used to be Cliff’s Natural Resources. He is using stock to purchase US steel, I believe, and I find the transaction pretty interesting. I’m going to read an excerpt from his two conference calls ago. He says, “We increased the size of the share we purchase program and bought back another $130 million worth of cliff shares in the second quarter, bringing the total amount of the buyback to 300 million since inception.
Other than this expansion project that they’re undertaking,” Anyway, he says, “To the short sellers, I want to thank you very much for the shares that we bought back. You sold your shares very cheap. Again, thanks for your gifts to Cliff shareholders. Besides the new normal for iron ore prices, the other view that drives our moves going forward is that the current weakness in the domestic steel market is temporary, so I guess that’s consistent with purchasing US steel.”
Bill Brewster: The thing that’s really tough for me to wrap my head around is, here he is saying thank you for selling your shares very cheap, and then he’s issuing shares that are now 30%, 40% lower than when he had this conference call, and it complicates the story.
The story used to be they had these pellets that were premium and they had a distribution advantage that they could send the pellets on rail down to these HBI plant’s hot brick at iron. It’s a better way to manufacture. And now he’s turning this, what I think is a fairly clean story, into an integrated steel manufacturer in the US that appears, at least to me, to be somewhat dependent on tariffs and using cheap currency.
Bill Brewster: I just think it’s one of those interesting examples of somebody being in a less quality business and having to take actions to try to either grow the business or justify its existence. It’s just the opposite of something like Starbucks where the decision is just build more stores. I just think it’s A, interesting and B, a pretty good example of Buffett saying bad businesses throw up bad decisions.
Jake Taylor: Difficult decisions.
Bill Brewster: Yeah, that’s right.
Jake Taylor: Yeah. I would say that maybe we all need to add to our investment checklist. Taunting short sellers is probably a good sell signal for you. You just never want to be, you don’t want to tempt the gods like that.
Tobias Carlisle: I literally just wrote that down as one of the points that I wanted to make. That’s just not a good sign when somebody is out there bombing on the shorts. No good CEO even cares what the shorts are doing cause they just know they’re going to get beaten up in the next.
Jake Taylor: Run your business don’t touch short sellers.
Tobias Carlisle: Who cares what the shorts deeds. It’s bizarre because shorts are doing, I short over a short time frame. It could be nothing. Doesn’t necessarily, it’s not a comment on the everlasting business. It’s a comment on the business where it is at the time or the stock price where it is relative to the business. It’s a silly thing to say.
Bill Brewster: Well, I think it’s super interesting. I have a part of me that really likes that. There’s a part of me that likes the hubris of it and I don’t mind. Money Mayweather is a guy that I used to root for. I mean I like the villain coming out and winning and the hubris of it, but I do contrast that with Robert Para from Ubiquiti. When the shorts attacked him, he did go to Twitter and he said something about short sellers, but a lot of what he wrote, they invited him on CNBC and his response was, “I’m not going on CNBC. I have a business to run” and-
"The Investors's Chief Problem--and even his worst enemy--is likely to be himself"
---Benjamin Graham
Recent CLF News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 10:16:53 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 06:26:19 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 04:05:19 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 12:53:44 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 05:16:16 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/11/2024 10:02:07 PM
- Form SD - Specialized disclosure report • Edgar (US Regulatory) • 05/24/2024 09:13:48 PM
- Cleveland-Cliffs Announces New Greenhouse Gas Emissions Reduction Goals • Business Wire • 05/24/2024 11:00:00 AM
- Cleveland-Cliffs Reminds U.S. Steel: You Have No Path to Close • Business Wire • 05/21/2024 05:08:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/20/2024 08:48:21 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/17/2024 09:23:36 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 05/17/2024 09:15:56 PM
- Cleveland-Cliffs Applauds International Trade Commission’s Decision to Uphold Tariffs on Japanese Imports • Business Wire • 05/10/2024 04:08:00 PM
- Cleveland-Cliffs to Publish Monthly Hot Rolled Coil Spot Price • Business Wire • 04/26/2024 11:00:00 AM
- Apple Loses Market Share in China, GM Surges in Pre-Market Following Upward Revisions for 2024 Projections, and More News • IH Market News • 04/23/2024 11:25:34 AM
- Cleveland-Cliffs Reports First-Quarter 2024 Results and Announces New $1.5 Billion Share Repurchase Program • Business Wire • 04/22/2024 08:05:00 PM
- U.S. Index Futures Surge While Wall Street Eyes Rebound on Earnings Focus, Oil Prices Slip • IH Market News • 04/22/2024 12:09:47 PM
- Cleveland-Cliffs to Host United States Secretary of Energy Jennifer Granholm at its Butler Works • Business Wire • 04/22/2024 11:00:00 AM
- Cleveland-Cliffs Applauds DOE’s Final Transformer Efficiency Standard Rule • Business Wire • 04/04/2024 02:37:00 PM
- Cleveland-Cliffs Issues Sustainability Report for 2023 • Business Wire • 04/03/2024 08:05:00 PM
- Cleveland-Cliffs to Announce First-Quarter 2024 Earnings Results on April 22 and Host Conference Call on April 23 • Business Wire • 04/02/2024 08:10:00 PM
- Cleveland-Cliffs Announces Price Increase for Hot Rolled, Cold Rolled and Coated Steel Products • Business Wire • 03/27/2024 01:21:00 PM
- Cleveland-Cliffs Selected to Receive $575 Million in US Department of Energy Investments for Two Projects to Accelerate Industrial Decarbonization Technologies • Business Wire • 03/25/2024 10:12:00 AM
- Cleveland-Cliffs Announces Final Results of Tender Offer • Business Wire • 03/18/2024 01:30:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/08/2024 11:38:57 PM
Last Shot Hydration Drink Announced as Official Sponsor of Red River Athletic Conference • EQLB • Jun 20, 2024 2:38 PM
ATWEC Announces Major Acquisition and Lays Out Strategic Growth Plans • ATWT • Jun 20, 2024 7:09 AM
North Bay Resources Announces Composite Assays of 0.53 and 0.44 Troy Ounces per Ton Gold in Trenches B + C at Fran Gold, British Columbia • NBRI • Jun 18, 2024 9:18 AM
VAYK Assembling New Management Team for $64 Billion Domestic Market • VAYK • Jun 18, 2024 9:00 AM
Fifty 1 Labs, Inc Announces Acquisition of Drago Knives, LLC • CAFI • Jun 18, 2024 8:45 AM
Hydromer Announces Attainment of ISO 13485 Certification • HYDI • Jun 17, 2024 9:22 AM